White House seeks $2B from investors for navigating ‘valley of death’ 

Source: Katherine Ling, E&E reporter • Posted: Wednesday, February 11, 2015

The White House is seeking $2 billion in “mission-driven” investment to spur early-stage clean energy technology through the so-called valley of death.

The Clean Energy Investment Initiative will leverage expertise at the Energy Department to facilitate “more and better” private-sector investment without spending additional federal dollars, Brian Deese, senior adviser to the president on climate and energy issues, told attendees at a summit today hosted by the Advanced Research Projects Agency-Energy, or ARPA-E, just outside Washington, D.C.

The initiative already has a $1 billion commitment from the University of California Board of Regents endowment, Deese said. Wells Fargo, the Schmidt Family Foundation, and the William and Flora Hewlett Foundation have also made initial investments in the initiative, building on previous commitments they have made in the sector, according to the White House.

The White House and DOE will host a summit in a few months with a goal of raising $2 billion in private investment by then, Deese told reporters after the announcement.

“The federal role here is both in convening and sharing best practices and providing our knowledge in part because of things like ARPA-E [that] help facilitate more and smarter investments,” Deese said. “We are in the process of constantly trying to look at: Are we fully leveraging the tools that we have in the federal government to encourage more and better investment” without additional appropriations?

DOE will take the lead on the initiative. The agency will both gauge investors’ interest and figure out places where DOE can offer technical know-how to support interest, but it will not oversee any of the investments, Deese said.

Deese took over for John Podesta as Obama’s senior adviser on environment and energy this month (E&E Daily, Jan. 22).

The “valley of death” is the time when a technology is between the lab and market, when developers need funds to prove the technology can be scaled up to commercialization. It is a space that ARPA-E has focused on with “high-risk,” game-changing technologies in energy, but the agency has, on average, had an annual budget of only a few hundred million dollars to invest since it opened its doors in 2009.

To date, ARPA-E has invested more than $1 billion into over 400 projects, according to the agency. Of those investments, 30 projects have formed new companies to market their technologies, and 37 teams have partnered with other government agencies for further development, according to DOE.

President Obama proposed $325 million for ARPA-E in his fiscal 2016 budget request, a 16 percent increase from current funding levels. DOE also still has $40 billion in loan guarantee authority remaining to distribute to low-carbon fossil fuel, renewable energy and nuclear technology.

But there is a dearth of investment in scaling next-generation technologies to market as government research budgets continue to decline and venture capitalists are discouraged by energy’s return-on-investment timelines, according to Matthew Stepp, executive director of the Information Technology and Innovation Foundation’s Center for Clean Energy Innovation.

“Mission-driven investors like philanthropic foundations can and have played an oversized role in breakthrough innovation, most notably spurring the Green Revolution in global agriculture,” Stepp said in a statement.

“Similarly sized breakthroughs are needed in clean energy to lower costs and increase technological performance so that low-carbon energy is within reach for all global citizens,” Stepp added.